1. Chapter 2 Property Ownership and Interests 2010©Cengage Learning. All Rights Reserved.

2. IN THIS CHAPTER The types of ownership of real property. Real estate agents must avoid the temptation to give legal advice. Real estate licensees must recognize the basic concepts of law. Licensees must encourage clients and customers to become properly informed through appropriate legal counsel. 2010©Cengage Learning. All Rights Reserved.

3. THE CONCEPT OF PROPERTY Real estate is the land and all improvements made both on and to the land, whether found in nature or placed there by humans. Real property is real estate plus all legal rights, powers, and privileges inherent in ownership of real estate. 2010©Cengage Learning. All Rights Reserved.

4. Bundle of Rights The sticks in the bundle include the major sticks of land, fixtures, and fruits of soil, all of which are tangible (movable). The bundle also includes intangible rights such as air rights, water rights, mineral rights, easements, leases, mortgages, licenses, profits, and so on. 2010©Cengage Learning. All Rights Reserved.

5. Real property consists of land and everything permanently attached to land, as well as the rights of ownership. – Ownership is transferred by a deed. Personal property (personalty or chattel) is everything that is not real property. – Ownership is transferred by a bill of sale. 2010©Cengage Learning. All Rights Reserved.

6. Land is defined as the earth’s surface extending downward to the center of the earth and upward to infinity, including things permanently attached by nature. 2010©Cengage Learning. All Rights Reserved.

7. Fixtures = Improvements 1. How permanent is the attachment? 2. What was the intent of the person installing the item? 3. If it is removed, can the item be used elsewhere? 2010©Cengage Learning. All Rights Reserved.

8. Trade Fixtures Items of personal property that a business operator installs in a building space (whether owned or rented) are presumed to remain personal property. 2010©Cengage Learning. All Rights Reserved.

9. An estate in real property is an interest in the property sufficient to give the holder of the estate the right to possession of the property. 2010©Cengage Learning. All Rights Reserved.

10. Types of Estates Freehold estate is ownership for an undetermined length of time. Nonfreehold or leasehold estate signifies possession with a determinable end. 2010©Cengage Learning. All Rights Reserved.

11. Fee Simple Absolute Provides the most complete form of ownership and bundle of rights available in real property; also called fee simple. 2010©Cengage Learning. All Rights Reserved.

12. Life Estates A freehold estate that defines itself. It is ownership, possession, and control for the life of someone. Ownership, possession, and control are contingent upon living. Therefore, the ownership, possession, and control are lost at death. Under a life estate, heirs of the deceased owner inherit nothing. 2010©Cengage Learning. All Rights Reserved.

13. Estate Pur Autre Vie Based on the lifetime of a person other than the life tenant. Provides for inheritance by the life tenant’s heirs only until the death of the person against whose life the estate is measured. 2010©Cengage Learning. All Rights Reserved.

14. Statutory Dower Rights Both dower (recognized in Michigan) and curtesy (not recognized in Michigan) refer to an automatic life estate owned by a surviving spouse in inheritable property owned by the deceased spouse alone during the marriage. If the owner of the land is the husband, the wife has a life estate called dower. 2010©Cengage Learning. All Rights Reserved.

15. LEASEHOLD ESTATES (NONFREEHOLD ESTATES) Estate for Years (Fixed Termination) Estate from Year to Year (Periodic Estate) Estate at Will Estate at Sufferance 2010©Cengage Learning. All Rights Reserved.

16. Ownership of Real Property Ownership in Severalty Concurrent Ownership – tenancy in common – joint tenancy – tenancy by the entirety – community property o Right of survivorship o Right of inheritance 2010©Cengage Learning. All Rights Reserved.

17. Condominium = Jointly Controlled “Horizontal Property Acts” authorize a three-dimensional property description, with a property line above and below the condominium. These horizontal property lines create a cube of air space or a volume that is the privately owned condominium. Air rights and area below the land surface are owned as tenants in common. 2010©Cengage Learning. All Rights Reserved.

18. Michigan Condominium Act a prospective purchaser of a new construction condominium must be provided detailed information concerning construction and proposed operating procedures. 1. the recorded master deed with the attached bylaws and subdivision plans 2. a copy of the purchase and escrow agreements 3. the Condominium Buyer’s Handbook 4. a disclosure statement 2010©Cengage Learning. All Rights Reserved.

19. Other Condo Considerations Site Condominiums Cooperatives Timesharing Michigan Uniform Securities Act Syndications 2010©Cengage Learning. All Rights Reserved.

20.  bill of sale  bundle of rights  chattel  community property  concurrent  condominium  convey  cooperative  co-ownership  curtesy  declaration  deed  defeasible  dower  emblements  estate at sufferance  estate at will  estate for years  estate from year to year  estate in real property  fee simple absolute CHAPTER TERMINOLOGY REVIEW  fixture  freehold estate  joint tenancy  leasehold estate  life estate  life tenant  master deed  Michigan Condo Act  Michigan Uniform  Securities Act  nonfreehold estate  ownership  pur autre vie  remainder  reversion  right of first refusal  right of inheritance  right of survivorship  separate property  severalty  site condominium  syndication  tenancy in common  tenants by the entirety  timesharing  trade fixtures  unities of ownership 2010©Cengage Learning. All Rights Reserved.